Headlines

Ukraine is facing a $3.5 billion funding gap and could need additional financing worth $19 billion next year if fighting continues through 2015, the International Monetary Fund said Tuesday in its latest review of the emergency bailout, The Wall Street Journal reported. The continuing conflict between Kiev's forces and pro-Russian separatists in the eastern region of Ukraine, where the country's manufacturing is centered, is forcing the economy deeper into recession and raising rescue costs.

Bond market heavyweights, backed by Washington, have come up with a plan they say should avoid a repeat of the sovereign debt meltdown between Argentina and its holdout creditors, the Financial Times reported. The International Capital Market Association, a group representing banks, lawyers, brokers and issuers from 53 countries, has published new terms for government bonds that Leland Goss, managing director, says should reduce the risk of future sovereign debt restructurings being disrupted by a few holdout creditors.

What seemed at first to be a short-term banking crisis is looking more like a chronic condition, the International New York Times reported. But the name of the affliction probably does not matter as much to companies and consumers as the money, about $4 billion in all, that has been stranded at a big Bulgarian bank since the government seized it in late June. Most Bulgarian banks are operating as usual.

Batelco will pursue its former Indian business partner for $212 million it says he owes the company, even though he was declared bankrupt last week, the Bahraini telecom operator said on Sunday, Reuters reported. Chinnakannan Sivasankaran, the chairman of Chennai-based Siva, filed for bankruptcy in the Seychelles after a British court in June ordered Siva and Sivasankaran to pay the money to Batelco's wholly owned subsidiary BMIC. This related to their failed Indian joint venture. The court also issued an indefinite worldwide freeze on the defendants' assets.

Workers in Brazil’s automotive industry have become accustomed to seeing their sector break new records, with Latin America’s biggest country becoming the fourth largest car producer in the world over the past decade, the Financial Times reported. But last week, 930 employees at General Motors’ plant in São José dos Campos near São Paulo were forced to accept a five-month “lay-off” or suspension to avoid outright dismissals.

The prospect of quantitative easing in Europe is reviving the market for risky bank debt, with two European lenders testing the waters on so-called contingent capital, or CoCo, bonds after a monthslong drought, The Wall Street Journal reported. CoCos—which can convert to equity or be wiped out if the issuer's capital levels drop below a threshold—had a booming start to the year as banks took advantage of record low rates to bolster their balance sheets ahead of a banking-system health check this fall.

Growth in China’s vast factory sector slackened in August as foreign and domestic demand slowed, surveys showed Monday, stoking speculation that further stimulus measures would be needed to prevent the economy from stumbling, the International New York Times reported. At the same time, surveys of purchasing managers across Asia told a tale of fewer new orders and faltering exports, but with brighter spots like India and Taiwan.

In a situation eerily reminiscent of the perfect storm that engulfed Irish property developers at the end of the boom, fears are growing over the astronomical debt exposure of developers in China, the world’s second-largest economy, where house sales and prices are falling rapidly, the Irish Times reported. Cash-strapped Chinese developers are borrowing a record amount in the offshore loan market this year, adding to the highest debt loads since 2005.

Auditor KPMG has refused to approve bailed-out Banco Espirito Santo's first-half report and accounts, published on Monday, citing the bank's failure to provide adequate information on its financial position and also warned of possible further losses, Reuters reported. BES's consolidated report confirmed a loss of nearly 3.6 billion euros (4.73 billion US dollar), first revealed on July 30, largely due to its exposure to its founding Espirito Santo family's crumbling business empire.

London’s property market stagnated for a second month in August as buyers became reluctant to accept high asking prices amid the prospect of increasing borrowing costs, Hometrack Ltd. said, Bloomberg News reported. The survey of real-estate agents showed values were unchanged in the capital in a “stark” change from the sharp increases over the past year that helped propel national prices to a record. Across England and Wales, values grew 0.1 percent in August, the same as in July, bolstered by gains in commuter towns in the southeast.